Fed Keeps Rates on Hold Amid Market Expectations

The Federal Reserve, led by Chair Kevin Warsh, kept the federal-funds rate unchanged at its July meeting. This decision was unexpected, as markets had priced in a 30% probability of a rate hike before the meeting.

The Fed has been relatively silent on its next steps, and this meeting's outcome is no exception. The federal-funds rate has been held in a target range of 3.50%-3.75% for over seven months, after being reduced by a cumulative 1.75 percentage points from September 2024 to December 2025.

Despite expectations that the Fed would start raising rates again due to accelerating inflation and diminishing labor market concerns, Warsh declined to offer a substantive explanation for the majority's decision to stand pat.